Private hospital health insurance covers towards treatment in a private hospital when you choose to be admitted as a private patient. You can choose your doctor, stay in a private hospital room (if one is available) and enjoy greater flexibility in scheduling your medical procedures.
This side of health insurance is there to subsidise out-of-hospital care that Medicare does not pay a benefit towards, such as dental, prescription glasses and physiotherapy consultations. An extras policy can include:
Private health hospital insurance offers the majority of its seniors’ support where the treatment is completed as an inpatient in a private hospital setting, i.e. hip or knee replacements, or cataract removal. Private extras products can aid towards the cost of specific items that do not attract a Medicare subsidy such as prescription glasses, hearing aids or dental work such as dentures or partial plates.
Medicare subsidises items such as:
Private health insurance doesn’t offer coverage towards services that aren’t listed under the Medicare Benefits Schedule (MBS), such as general medical check-ups you might be required to take when taking out a life insurance policy.
The cost of health insurance depends on the type of coverage you select. Ensuring you don’t include redundant services like family-planning is one important way to reduce the cost of coverage.
Luckily, health insurance for seniors over 65 attracts a higher government rebate than younger policyholders to help reduce the cost of premiums. As outlined in the table below, the standard rebate amount is 29.236% for singles over 65 years old earning $90,000 or less and families over 65 years old earning $180,000 or less.² The standard rebate on health insurance for seniors over 70 is higher again and is applied at a rate of 33.413%.
|Singles||< $90,000||$90,001 – 105,000||$105,001 – 140,000||> $140,001|
|Families||< $180,000||$180,001 – 210,000||$210,001 – 280,000||> $280,001|
|Age||Standard||Tier one||Tier two||Tier three|
|65 – 69||29.236%||20.883%||12.529%||0%|
|Medicare Levy Surcharge (MLS)|
A senior pays the same as any younger individual for the same level of private health insurance.
Why? Private health insurance is community rated, which means everyone – no matter their age or condition – can purchase the same policy at the same price. The exception here is LHC, where you could be required to pay a higher premium if you attract the loading.
On top of this, health funds cannot deny policies to certain people based on their health or the likelihood of them claiming on certain services.
That’s completely fine. You can still include extras and hospital benefits in your cover that relate to your conditions at no extra premium; the only limitation is the waiting period. Once you have served the relevant waiting period, you will receive the full benefit associated with the condition – as long as it is covered by the policy, of course.
A pre-existing health condition is any illness, ailment, or condition that you had signs or symptoms of in the six months before you took out a policy, or upgraded to a higher level of cover. This condition does not need to have been diagnosed by your doctor. There is usually a twelve-month waiting period before any pre-existing conditions can be covered, except for rehabilitation, psychiatric care or palliative care, which have a two-month wait.
Waiting periods prevent people from claiming on certain parts of their health insurance policy within a particular timeframe. Without them, someone could sign up, claim on an expensive treatment, and then cancel after receiving their benefit – without paying anything substantial on their policy. This type of behaviour would disadvantage other members and would result in increased premiums for all fund members.
Standard waiting periods for hospital cover are as follows:
Whilst commonly similar, individual funds set the waiting periods for extra policies. Make sure you are fully aware of all the waiting periods that apply to you.
When it comes to private hospital treatments, Medicare covers 75% of the Medicare Benefits Schedule (MBS) fee, which is a listing of prices for various treatments the Australian Government deems adequate for the service. Private hospital insurance policies cover the remaining 25% if you’re treated as a private patient in a public or private hospital.
Certain medical or hospital charges may exceed what you can claim back from Medicare and your health insurance combined, as health practitioners can charge more than the MBS fee – this is known as the ‘gap’. To help reduce these out-of-pocket expenses, some health funds offer gap cover by making arrangements and agreements with hospitals and particular doctors.
Some services Medicare doesn’t pay towards include:
¹ Elective surgery. Australian Institute of Health and Welfare, Australian Government. 2020.
² PrivateHealth.gov.au – Australian Government Private Health Insurance Rebate. Accessed September 2020.